Free-lance and commercial activity are not mutually exclusive. It is possible to be active both as a freelancer and as a business.
In order to classify the nature of your income for tax purposes, the tax office distinguishes between separable and inseparable mixed activities in the case of a sole trader.
Separable mixed activities
If, as a sole proprietor, you carry out both a freelance and a commercial activity, these must be treated separately for tax purposes if there is no connection between the two areas.
In order to separate your freelance activities from your business activities, it is advisable to
- keep separate accounts,
- keep separate bank accounts and
- separate the businesses or at least the stocks of goods.
Business expenses, on the other hand, can be divided by estimation.
Example: An ophthalmologist sells contact lenses and care products.
Inseparably mixed activities
Inseparably mixed activities exist if your income from different sources of income cannot be separated. There must be a material and economic connection between your activities. This means that they must be mutually dependent. If you run a sole proprietorship and your activities are interrelated in this way, the overall picture of your activity determines whether it is classified as freelance or commercial. The overall picture does not result from the shares of your activities in turnover or profit, but from the activity that characterises your overall activity.
A commercial activity is assumed if
- Your business appears to the outside world as a single unit and your freelance activity is a by-product of your commercial activity, or
- You owe a uniform success or a uniform performance and your commercial activity also contains liberal professional elements.
Example: A tax advisor takes over the bookkeeping for clients in addition to drawing up the balance sheet and preparing the tax returns. Bookkeeping in itself constitutes a commercial activity. Since the activities are mutually dependent, but the bookkeeping is of secondary importance within the framework of the tax support contract, the entire activity resulting from this is to be attributed to the self-employed activity.
Special features for partnerships
If you have joined forces with other entrepreneurs to form a partnership (e.g. OHG, KG, GbR), the tax office assesses the activity of the partnership as a whole as commercial if it also carries out a commercial activity in addition to a liberal professional activity. Free-lance income is only not reclassified as commercial income if the commercial activity of the partnership is of secondary importance.
Example: A joint practice for physiotherapy generates income from freelance physiotherapeutic activities and from the sale of neck pillows and ointments. The net turnover from the sales activity amounts to up to 3 % of the total turnover achieved and a maximum of € 24,500.
This minimum commercial activity has no effect on the freelance activity. If you exceed one of these two limits (3 % of the total sales revenue or € 24,500), the tax office assesses the activity of the group practice as a whole as commercial.